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Roading New Zealand

Roading New Zealand. Presentation to Hon Chris Tremain Minister of Local Government. 21 March 2013. About Roading New Zealand.

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Roading New Zealand

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  1. Roading New Zealand Presentation to Hon Chris Tremain Minister of Local Government 21 March 2013

  2. About Roading New Zealand Roading New Zealand is an incorporated Society and a national industry body representing road maintenance, surfacing and civil contractors building and maintaining NZ’s transport infrastructure since 1988.

  3. Roading New Zealand (RNZ) Vision A safe, highly skilled, productive and sustainable roading industry providing value for money to its clients a through technical excellence and a collaborative approach to contracting • RNZ was set up in 1988 to ensure the Government reforms of contracting out all roading work was successful. • Since then RNZ has provided leadership and commentary to achieve this vision based on its members’ experience of working within all contract models and understanding where value to the client lies • Members carry out 80% of all roading work in NZ and a significant amount of other infrastructure work – water, parks. They are totally committed to zero harm and improved health & safety performance

  4. Opportunities • RNZ has no view regarding Local Authority amalgamation versus clustering through CCOs or any other models • We see these opportunities below as focusing on the network and possible under various structural models • Opportunities for improved efficient and effective delivery • Contracting out (efficiency) • Improved asset management (effectiveness) • Smarter procurement (efficiency and effectiveness)

  5. Contracting OutConstruction and Maintenance Infrastructure • Infrastructure construction has long been contracted out • In 1990 legislation required road maintenance to be contracted out • Big concerns by local government proved unfounded • No market failure in the provinces • Contractors excelled in emergency works response • Substantial & sustained efficiency savings • Reforms resulted in efficiency gains/savings of 16% on average across the sector – up to 30% not uncommon • Freed up staff to focus on asset management

  6. Improved Asset Management Clustering of asset management amongst local authorities provides the following benefits • Larger networks to better optimise treatment selection giving Whole of Life savings (Scenario testing—economic and engineering) • Better coordination of activities from a one network approach • The ability to employ/pay more highly skilled people because the jobs are bigger • Reduced administration and contract costs • The ability to better keep up to date with new technologies and innovations

  7. Smarter Procurement--The Future We Suggest Larger, bundled, aggregated, collaborative, performance based contracts between the local authority and contractor up to 9 years long because of efficiencies from • economies of scale • reduced contractor tendering costs • reduced local authority tender evaluation costs • fence to fence co-ordination of activities (e.g. resealing and road marking) • utilising the expertise of the whole supply chain

  8. Smarter Procurement – Future (cont.) • considerable up-skilling of staff due to larger critical mass of organisations • confidence to invest in people, specialist plant and equipment, systems, research and development and innovation • being able to attract and retain the best staff • more resource availability for urgent emergency response (floods, earthquakes etc) • better risk management and communication between local authority and contractor

  9. Smarter Procurement – cont. Need to ensure a healthy and competitive contracting industry by • continuing to monitor competition • responding if there are less than 3 tenderers per contract • ensuring smaller contractors have work through the use of subcontractors • providing growth opportunities for smaller contracts • small subcontractor • large subcontractor • joint venture partners • main contractor

  10. Smarter Procurement – Evidence • This model has been in place with Auckland Transport for 1 year • Efficiency gains/savings for physical works (contractors) = 6% • Efficiency gains/savings for professional services (consultants) = 14% • There are limits on the number of contracts a contractor can win • 30% of work must be done through sub-contractors • NZTA (state highways) has just announced that it will be moving to this model as well, possibly with those TLAs interested

  11. Thank you And How Can We help? www.roadingnz.org.nz

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